Numerous companies stay at the top of their respective industries by offering a great deal of innovation to consumers. The new spaces that are created in the market by new innovations allow these companies to take advantage of fresh market trends and data forecasts.
There are equal amounts of reward and risk that comes with product innovation. While a new product can result in huge profits for a business, there are unfortunate disadvantages if these inventions don’t succeed.
When entering a new market, one must be aware of both the pros as well and cons of developing your own products. Let’s explore on each.
What are the benefits to inventing a new product?
1. Monopoly
Striking it big with a new product will produce a few obvious benefits. Not only will you be rewarded with huge earnings, the company will be the sole provider of a particular service. This means it will have a temporary monopoly if it’s in a new niche. This also helps with long term branding, as the company will be recognized for their innovation years after other companies create their own similar variations.
2. Customer Excitement
New ideas can be very enticing for clients and consumers. While you test and cultivate your product, you can create anticipation by giving your following a taste of the user experience. Many of us are familiar with popular video game launches or new technology press releases where millions of people eagerly wait in line to say that they were first customers.
3. Competitive Advantage
Businesses can gain a competitive advantage over related companies by disrupting the status quo in a market. If a new product can deliver on better pricing, quality, and/or features, loyalty to other brands will dissipate in favor of yours. This allows the consumer to happily switch to another company. Original innovation gives them an opportunity to topple the giants in their space because the product brings a novel take on an existing idea.
What are the potential pitfalls of inventing a new product?
1. Product Failure/Liability
There can be many ways that a new invention can fail, in both the long and short term. Years down the road, an unanticipated problem can arise causing injury or some sort of loss to the customer, resulting in potential legal action. Harrell & Harrell tells us that product liability is “a legal term used to describe the liability of a manufacturer, distributor and seller for any injury to a buyer caused by a defective product.”
Sensationalism created behind the promised value of your invention could outweigh the actual value the product can generate. Underwhelming results will create a reputation associated with a lack of quality or value. There is just always the possibility that the product doesn’t deliver, which can set your company back.
2. Unrealistic Expectations
Product development with unrealistic expectations can be detrimental to the viability of the business. Budgets allocated to research and development can be dangerously depleted if either the product isn’t completed on time, or requires more funding than anticipated. In such a case, there are perhaps millions of dollars that must be recouped from other divisions of the business. This can cause these departments to cut corners in order to maintain the integrity of organization.
3. Lack of Brand Consistency
If a company innovates to the degree where they lose their brand identity, they could potentially lose their customers that were once loyal. When customers are comfortable knowing that a company has product solutions that are consistent, they will feel better exclusively purchasing from that company. Setting milestones for the development of a new product can cause a business to venture too far from their mission statement. As a result, the industry could view your company as inconsistent and baseless. According to Venveo, brand consistency is part of building trust.
Conclusion
Paving the path with a new invention is a tremendous way to stimulate growth in a company. If plans aren’t achieved, however, it can be devastating for the company’s brand. Having a realistic plan can prepare you for whatever you’ll face. As long as the risks are considered with the rewards, the company is in the best position to capitalize on innovative practices.